Item 1.01
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Entry into a Material Definitive Agreement.
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Merger Agreement.
On May 9, 2016, Alexza Pharmaceuticals, Inc., a Delaware corporation (the
Company
), Grupo Ferrer Internacional, S.A., a
Spanish
sociedad anonima
(
Parent
), and Ferrer Pharma Inc., a Delaware corporation and a wholly owned indirect subsidiary of Parent (
Purchaser
), entered into an Agreement and Plan of Merger (the
Merger Agreement
). Pursuant to the Merger Agreement, and upon the terms and subject to the conditions thereof, Purchaser has agreed to commence a cash tender offer to acquire all of the shares of the Companys common stock
(excluding any shares of the Companys common stock owned, directly or indirectly, by Parent) (the
Offer
) for a purchase price of $0.90 per share, net to the holders thereof in cash, subject to reduction for any applicable
withholding taxes in respect thereof, without interest (the
Cash Consideration
) plus one contractual contingent value right per share of the Companys common stock (each, a
CVR
), which shall represent the
right to receive a pro-rata share of up to four payment categories in an aggregate (i.e., to all CVR holders assuming all four payments are made) maximum amount of $35 million (subject to certain deductions) if certain licensing payments and revenue
milestones are achieved and subject to the terms and conditions of the contingent value rights agreement to be entered into by Parent and the rights agent thereunder prior to the closing of the Offer, net to the holder thereof in cash, subject to
reduction for any applicable withholding taxes in respect thereof, without interest (together with the Cash Consideration, the
Offer Price
). On May 9, 2016, the boards of directors of both the Company and Parent approved the
terms of the Merger Agreement. Prior to entering into the Merger Agreement, Parent was the holder of greater than 10% of the Companys outstanding voting securities, a debtholder of the Company (as described in more detail below) and the
Companys commercial partner for ADASUVE in Europe, Latin America, the Commonwealth of Independent States countries, the Middle East and North Africa countries, Korea, Philippines and Thailand.
The consummation of the Offer will be conditioned on (i) at least a number of shares of the Companys common stock, having been
validly tendered into and not withdrawn from the Offer which equals, when added to any shares of the Companys common stock owned by Parent or Purchaser or any of their respective subsidiaries, at least a majority of the then outstanding shares
of the Companys common stock, (ii) the accuracy of the representations and warranties contained in the Merger Agreement, subject to certain qualifications, (iii) the Company having performed certain covenants contained in the Merger
Agreement, subject to certain conditions, (iv) the Second Forbearance Agreement (as defined below) continuing in full force and effect, without any default, and performance of any required condition thereunder, as of the closing of the Offer,
(v) the aggregate number of shares of Company common stock held by persons who properly exercise appraisal rights under Section 262 of the Delaware General Corporate Law represents no more than 20% of the shares of Companys common
stock then outstanding and (vi) other customary conditions. The Offer is not subject to a financing condition.
Following the
consummation of the Offer, the Merger Agreement provides that Purchaser will merge with and into the Company (the
Merger
) and the Company will become a wholly owned subsidiary of Ferrer Therapeutics, Inc., a Delaware corporation
and subsidiary of Parent. In the Merger, each outstanding share of the Companys common stock (other than shares owned by Parent, the Company or Purchaser or any of their direct or indirect wholly owned subsidiaries and shares with respect to
which appraisal rights are properly exercised in accordance with Delaware law) will be converted into the right to receive the Offer Price. The consummation of the Merger is subject to certain closing conditions.
The transactions described above are expected to close in the second quarter of 2016 and are subject to customary closing conditions.
In addition, in connection with the transactions contemplated by the Merger Agreement, the vesting of all unvested options and unvested
restricted stock units of the Company will be accelerated to be vested in full and, with respect to the options, immediately exercisable at least six days prior to the closing of the Offer. Any options that are not exercised prior to the closing of
the Offer will be cancelled. Additionally, pursuant to the terms of the Merger Agreement, (i) each holder of a warrant originally issued by the Company on October 5, 2009 or February 23, 2012 will receive a lump-sum cash payment equal
to (A) the total number of shares of common stock of the Company issuable to such holder upon the exercise of the applicable warrant, multiplied by (B) the value of such warrant to purchase one share of the Companys common stock,
calculated in accordance with Appendix B of such warrant; and (ii) each holder of a warrant originally issued by the Company on March 8, 2014 (the
2014 Warrants
) will receive (A) a lump-sum cash payment equal to
(1) the total number of shares of the Companys common stock issuable to such holder upon the exercise of the applicable warrant, multiplied by (2) the excess of (x) the Cash Consideration over (y) the per-share exercise
price for such warrant and (B) one CVR for each share of the Companys common stock underlying such warrant.
The Merger
Agreement contains customary representations, warranties and covenants of the parties. The Company has agreed to refrain from engaging in certain activities until the effective time of the Merger. In addition, under the terms of the Merger
Agreement, the Company agrees not to solicit or support any alternative acquisition proposals, subject to customary exceptions for the Company to respond to and support unsolicited proposals in the exercise of the fiduciary duties of the Board of
Directors of the Company. The Company will be obligated to pay a termination fee of $1,000,000 to Parent in certain circumstances following termination of the Merger Agreement. Additionally, if either the Company or Parent terminates the Merger
Agreement in accordance with its terms, then all outstanding unpaid principal and accrued interest owed on the Restated Note (as defined below) by the Company will become immediately due and payable to Parent.
The foregoing description of the Merger Agreement does not purport to be complete and is
qualified in its entirety by reference to the Merger Agreement, which is attached as Exhibit 2.1 to this Current Report on Form 8-K and is incorporated herein by reference. The Merger Agreement has been attached to provide investors with information
regarding its terms. It is not intended to provide any other factual information about the Company. In particular, the assertions embodied in the representations and warranties contained in the Merger Agreement are made solely for the benefit of
Parent and Purchaser and are qualified by information in the confidential disclosure letter provided by the Company in connection with the signing of the Merger Agreement. This confidential disclosure letter contains information that modifies,
qualifies and creates exceptions to the representations and warranties set forth in the Merger Agreement. Moreover, certain representations and warranties in the Merger Agreement were used for the purpose of allocating risk between the Company,
Parent and Purchaser, rather than establishing matters of fact. Accordingly, the representations and warranties in the Merger Agreement may not constitute the actual state of facts about the Company, Parent or Purchaser.
In connection with the execution of the Merger Agreement, the Company entered into a Forbearance and Waiver Agreement (the
Second
Forbearance Agreement
) with Atlas U.S. Royalty, LLC, a Delaware limited liability company and wholly owned subsidiary of the Company (
Atlas
), Purchaser and the holders of the 2014 Warrants and those certain notes in the
aggregate principal amount of $45,000,000 previously issued by Atlas on March 18, 2014 (the
Notes
). Pursuant to the terms of the Second Forbearance Agreement, the holders of the Notes agreed (i) to forbear on exercising all
rights and remedies under that certain Indenture by and between Atlas and U.S. Bank National Association, as the trustee (as previously filed with the U.S. Securities and Exchange Commission on May 5, 2014 as Exhibit 10.2 to the Companys
Quarterly Report on Form 10-Q for the period ending March 31, 2014) (the
Indenture
) and the other documentation relating to the Notes and Atlas through the earlier of November 9, 2016 (subject to extension under certain
circumstances) and the termination of the Merger Agreement and (ii) to ratify certain amendments to Companys license agreement with Teva Pharmaceuticals USA, Inc. Pursuant to the terms of the Second Forbearance Agreement, the holders of the
Notes also agreed to the cancellation of the Notes and the discharge of the Indenture in connection with the consummation of the Offer and to take any and all actions necessary to effect the foregoing. In addition, the holders of the 2014 Warrants
agreed to the treatment of the 2014 Warrants in connection with the Offer as described in the Merger Agreement effective as of the Merger. Each of the holders of the Notes, the holders of the 2014 Warrants, Atlas and the Company also agreed to
certain releases of claims effective upon the consummation of the Offer or, in the case of claims with respect to Purchaser and its affiliates, upon the execution of the Second Forbearance Agreement.
In connection with the execution of the Merger Agreement, the holders of the Notes each entered into a participation agreement with Atlas
pursuant to which Atlas agreed to grant to the holders of the Notes contractual rights to receive payments from Atlas upon the receipt of certain payments and achievement of certain milestones in respect of the commercialization of ADASUVE within
the Unites States.
Amended and Restated Promissory Note.
On May 9, 2016, the Company amended and restated that certain promissory note previously issued to Parent on September 28, 2015, as
amended on March 21, 2016 and April 18, 2016 (the
Restated Note
), to, among other things (i) increase the maximum principal amount of the Restated Note to $6.3 million, (ii) extend the maturity date of the
Restated Note to September 30, 2016 and (iii) provide for certain events of default under the Restated Note in connection with the Merger. As of May 10, 2016, the outstanding principal amount of the Restated Note was $6.3 million.
The foregoing description of the Restated Note does not purport to be complete and is qualified in its entirety by reference to the
Restated Note, which is attached as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.